Two steps in the right direction for Baltimore

Stephen Walters

When cities become dysfunctional, we do not quickly abandon them and our established social networks and routines. And after a city puts itself back together, we may take years to become convinced that the bad old days are over.

Awareness of these facts likely accounts for City Hall's mature, muted response to the Census Bureau's latest population report: after six straight decades of embarrassing shrinkage, Baltimore has grown by about 1,100 residents since mid-2011. But there has been no triumphant rhetoric from Mayor Rawlings-Blake. Just an observation that this is "a step in the right direction."

And a small one, at that. Baltimore County, by contrast, has added 12,400 residents since the last census. So we're still losing metro-area market share. But let's not kill the buzz. Gains are worth celebrating, especially if there's reason to believe they'll continue or accelerate. And there is.

In two key respects — arguably, the two most fundamental to residential and business location decisions — the city is moving in the right direction. Not as fast or far as it must, but change has begun. It's the product of many political hands over several years, and some of the progress has been reluctant or accidental. But backsliding is unlikely.

There are, of course, hundreds of factors affecting our choices about where to live or work. Most — a taste for detached homes over rowhouses, for example — are not under the control of policy-makers. But two important ones are: the security and utility of our private and public property. And for decades, Baltimore guarded neither very well.

Indeed, the city waged war on its citizens' private property rights from 1950 to 1975, raising property tax rates 19 times. Each hike damaged households' and businesses' cash flows and wrecked property values. At the tax and mortgage rates prevailing through the '80s and '90s, city properties had to be discounted fully 17 percent to carry the same monthly costs as competitive ones in the county.

This era of expropriation killed urban investment and accelerated flight. Massive infusions of federal and state redevelopment aid could not offset these outflows. Eventually, policymakers realized they'd reached — indeed, passed — the outer limits of tax fairness and efficiency, but the political will to become more capital-friendly always seemed in short supply.

Until recently. The last mayoral election featured four attractive candidates, each with a credible program to make the city's property tax rate more competitive with the county's. And though Mayor Rawlings-Blake's plan was the most modest of the four, she has become more bold since her electoral victory, embracing a proposal by her budget consultants to take the city's rate down a fifth, to 1.778 percent, within 10 years.

This is a good thing. Not a great thing, as the city's rate will still exceed the county's by 60 percent. But that's far less repulsive to investment than the current 104 percent tax penalty for city living, and it sends a message that "financial capital punishment" is on the way out.

Then there is the city's progress in protecting citizens' rights to safely use public property. Baltimore's homicide rate in the '80s and '90s was often nine times the national average, and it remained stubbornly high even as other major cities adopted more effective policing methods to make their streets safer.

In 1999, fed up, Baltimoreans elected a law-and-order mayor — Martin O'Malley, who imported New York's CompStat system of targeting law enforcement resources where they are most needed. Over the next decade, the city's homicide rate fell by more than a fifth (though it blipped upward last year), its property crime rate fell 38 percent, and its overall violent crime rate fell 42 percent.

Again, much more needs to be done. Adopting the Big Apple's "stop, question, and frisk" policy would discourage carrying illegal guns and save lives — New York's homicide rate is now at its lowest level since the early '60s, and one-eighth Baltimore's rate — though it might trouble those more interested in maximum civil liberty than minimum loss of life.

At the least, we need more cops. A recent study by economists at the University of California Berkeley has calculated that each additional dollar spent on policing in Baltimore would yield about $3.40 in reduced costs of crime.

We are, then, just scratching the surface of the city's growth potential. If we continue to improve our fundamentals and raise the yield on our private and public assets further, bigger population gains are in prospect. Indeed, they're inevitable.

Stephen J.K. Walters is professor of economics at Loyola University Maryland. His email is swalters@loyola.edu.